MORE BANG FOR YOUR BUCK
Questions you’ll answer:
- Why is cash flow the lifeblood of a business?
- What tools, skills and judgment will I need to ”count” cash flows and make better operating decisions?
- How do staging, option value, and financing affect risks and rewards?
Dilemmas you’ll face:
- How can I apply basic Unit Economics to predict how much cash a business will need to reach breakeven?
- How do I analyze financial statements and evaluate a business model to predict free cash flows?
- What is the appropriate valuation method for valuing the free cash flows produced by a business?
Topics you’ll cover:
- What is the difference between net profit and free cash flow?
- What factors have the most impact on cash needs and the value you create in your business?
- How do I accurately report financial results to third parties?
Many people who work in large businesses neglect the importance of cash flow, assuming that rising net profits indicate a healthy business. An entrepreneur knows that cash, not profits, is the lifeblood of a business. The value of your business will soar if you measure cash, invest it well, and continually increase the free cash flows. But run out of cash and your business will die.
The Cash and Valuation course delivers the tools, skills and judgment students need to (a) create or evaluate a business model; (b) know how much investment a business will need and how much free cash flow it is likely to produce; (c) value the free cash flows produced by a business; (d) understand how staging, option value and financing affect risks and rewards; and (e) report financial results to third parties.
By the end of the Cash and Valuation course, students will be able to:
- Create financial statements and evaluate a business model for a start-up using basic Unit Economics to predict how much cash a business will need to reach breakeven and how much future free cash flows it will then produce.
- Analyze historical financial statements and evaluate a business model for an existing business to use trends in revenues, costs and asset intensity – along with your analysis of the Unit Economics and competitive analysis – to predict free cash flows.
- Develop an intuitive sense of how the interplay between revenue growth rates, margins and asset intensity impact cash needs, free cash flows and the value you create in your business.
- Value the free cash flows produced by a business using several valuation methods.
- Understand how staging, option value and financing affect value; and
- Report accurately financial results to third parties.